HB 220: "An Act relating to geothermal resources; relating to the definition of 'geothermal resources'; and providing for an effective date."
00 HOUSE BILL NO. 220 01 "An Act relating to geothermal resources; relating to the definition of 'geothermal 02 resources'; and providing for an effective date." 03 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 04 * Section 1. AS 31.05.030(m) is amended to read: 05 (m) The commission has jurisdiction and authority over all persons and 06 property, public and private, necessary to carry out the purposes and intent of 07 AS 41.06 [, EXCEPT FOR PROVISIONS IN AS 41.06 FOR WHICH THE 08 DEPARTMENT OF NATURAL RESOURCES HAS JURISDICTION]. 09 * Sec. 2. AS 38.05.181(a) is amended to read: 10 (a) The commissioner may, under regulations adopted by the commissioner, 11 grant prospecting licenses [PERMITS] and leases to a qualified person to explore for, 12 develop, or use geothermal resources. A prospecting license or lease is not required 13 under this section to explore for, develop, or use geothermal resources drawn 14 from a depth with a ground temperature of not more than 30 degrees Celsius if
01 the geothermal resource is intended for domestic, noncommercial, or small-scale 02 industrial use [WHEN TITLE TO THE SURFACE PARCEL IS HELD BY A 03 PERSON OTHER THAN THE STATE, THAT PERSON SHALL HAVE A 04 PREFERENTIAL RIGHT TO A GEOTHERMAL PROSPECTING PERMIT OR 05 LEASE FOR THE AREA UNDERLYING THE SURFACE PARCEL. THE 06 SURFACE OWNER MUST EXERCISE THE PREFERENCE RIGHT WITHIN 30 07 DAYS AFTER RECEIVING NOTICE OF THE APPLICATION FOR A PERMIT, 08 OR BY AGREEING TO MEET THE TERMS OF A BID WITHIN 60 DAYS AFTER 09 RECEIVING NOTICE OF THE ACCEPTANCE OF THE BID FOR A LEASE]. 10 * Sec. 3. AS 38.05.181(c) is amended to read: 11 (c) On state land that has not been declared a competitive geothermal area or 12 withdrawn from geothermal prospecting, the commissioner may issue a prospecting 13 license [PERMIT] to the first qualified applicant. The license [PERMIT] conveys an 14 exclusive right, for a period of five [TWO] years, to prospect for geothermal resources 15 on state land included under the license [PERMIT]. The commissioner has discretion 16 to renew the license [PERMIT] for an additional one-year term. A holder of a 17 prospecting license [PERMIT] has the right, after completion of an agreed-upon 18 work commitment [UPON THE SHOWING OF A DISCOVERY OF 19 GEOTHERMAL RESOURCES IN COMMERCIAL QUANTITIES] and the 20 submission of an exploration [A DEVELOPMENT] plan acceptable to the 21 commissioner, to convert the license [PERMIT] to a noncompetitive lease at a royalty 22 rate under (g) of this section. The conversion privilege must be exercised not later than 23 30 days after the expiration of the license [PERMIT]. If the land included within the 24 license [PERMIT] is designated a competitive geothermal area during the license 25 [PERMIT] term, the licensee [PERMITTEE] must apply for a noncompetitive lease 26 within 30 days after notification of the designation or forfeit the conversion privileges 27 and the exclusive right to prospect. 28 * Sec. 4. AS 38.05.181(d) is amended to read: 29 (d) On state land that is designated a competitive geothermal area and is not 30 subject to an existing prospecting license [PERMIT], the commissioner may issue 31 geothermal leases to the highest bidder by competitive bidding procedures established
01 by regulations adopted by the commissioner. At the discretion of the commissioner, 02 competitive lease sales may be by oral or sealed bid, on the basis of a cash bonus, 03 profit share, or royalty share. 04 * Sec. 5. AS 38.05.181(e) is amended to read: 05 (e) Prospecting licenses [PERMITS] and geothermal leases granted under this 06 section must [, EXCEPT IN THE CASE OF PARCELS SUBJECT TO A 07 PREFERENCE RIGHT UNDER (b) OF THIS SECTION,] be issued for at least 40 08 acres but not more than 2,560 acres. A person may not own, or hold an interest in, 09 geothermal leases covering more than 100,000 [51,200] acres. However, geothermal 10 leases in commercial production, individually or under a unit operation or well spacing 11 or pooling arrangement, do not count against the acreage limitation. All prospecting 12 licenses [PERMITS] and geothermal leases are subject to an annual rental fee 13 established by the department in regulation and [,] payable in advance [, OF $3 14 PER ACRE]. The rental for a year shall be credited against royalties accruing for that 15 year. 16 * Sec. 6. AS 38.05.181(f) is amended to read: 17 (f) A geothermal license [LEASE] shall be issued for a [PRIMARY] term of 18 five [10] years and may be converted to a lease under (c) of this section 19 [RENEWED FOR AN ADDITIONAL TERM OF FIVE YEARS IF THE LESSEE IS 20 ACTIVELY ENGAGED IN DRILLING OPERATIONS]. A geothermal lease is valid 21 for the duration of commercial production. Beginning 20 years after the initiation of 22 commercial production and at 10-year intervals thereafter, the commissioner may 23 renegotiate the rentals and royalties due on a geothermal lease. 24 * Sec. 7. AS 38.05.181 is amended by adding new subsections to read: 25 (i) The commissioner may require that a geothermal lease issued under this 26 section require the lessee to operate under a unit agreement and may prescribe a plan 27 under which the lessee must operate. A unit agreement must adequately protect all 28 parties in interest, including the state. Except as provided in (f) and (j) of this section, 29 the commissioner may not reduce royalty on a geothermal lease issued under this 30 section in connection with a unit agreement. 31 (j) When determined by the commissioner to be in the public interest, the
01 commissioner may authorize a lessee and the lessee's representative together with each 02 other, or jointly or severally with another lessee, to collectively adopt or operate under 03 a unit agreement. The commissioner may, with the consent of the holders of leases 04 involved, establish, change, or revoke drilling, producing, and royalty requirements of 05 the leases. 06 (k) A geothermal lease and a unit agreement approved under this section must 07 specify the lease and unit agreement are subject to applicable statutes and regulations 08 in force at the time the lease or unit agreement is entered and to any amendments to 09 those statutes or regulations and to statutes or regulations thereafter. 10 * Sec. 8. AS 38.05.965(6) is repealed and reenacted to read: 11 (6) "geothermal resources" means the natural heat of the earth; the 12 energy, in whatever form, below the surface of the earth present in, resulting from, or 13 created by, or which may be extracted from, such natural heat; and all minerals in 14 solution or other products obtained from naturally heated fluids, brines, associated 15 gases, and steam, in whatever form, found below the surface of the earth; but 16 excluding oil, hydrocarbon gases, or other hydrocarbon substances; 17 * Sec. 9. AS 41.06.020(e) is amended to read: 18 (e) Nothing in this chapter limits the authority of the department 19 [(1)] over geothermal resources under AS 38.05.181, including the 20 authority [; OR 21 (2)] to approve and manage geothermal units or operations that include 22 state land. 23 * Sec. 10. AS 41.06.020 is amended by adding a new subsection to read: 24 (f) The commission may, when consistent with the purpose and intent of this 25 chapter, exempt from this chapter a domestic, noncommercial, or small-scale 26 industrial use of geothermal resources drawn from a depth with a ground temperature 27 of not more than 30 degrees Celsius. 28 * Sec. 11. AS 41.06.060(5) is repealed and reenacted to read: 29 (5) "geothermal resources" means the natural heat of the earth; the 30 energy, in whatever form, below the surface of the earth present in, resulting from, or 31 created by, or which may be extracted from, such natural heat; and all minerals in
01 solution or other products obtained from naturally heated fluids, brines, associated 02 gases, and steam, in whatever form, found below the surface of the earth; but 03 excluding oil, hydrocarbon gases, or other hydrocarbon substances; 04 * Sec. 12. AS 41.06.005(b) and 41.06.030 are repealed. 05 * Sec. 13. The uncodified law of the State of Alaska is amended by adding a new section to 06 read: 07 APPLICABILITY. This Act applies to a license or lease for a geothermal resource 08 entered into on or after the effective date of this Act. 09 * Sec. 14. The uncodified law of the State of Alaska is amended by adding a new section to 10 read: 11 TRANSITIONAL PROVISIONS: REGULATIONS. (a) The Department of Natural 12 Resources and the Alaska Oil and Gas Conservation Commission may adopt regulations to 13 implement the changes made by this Act. The regulations take effect under AS 44.62 14 (Administrative Procedure Act) but not before the effective date of the law implemented by 15 the regulation. 16 * Sec. 15. Section 14 of this Act takes effect immediately under AS 01.10.070(c). 17 * Sec. 16. Except as provided in sec. 15 of this Act, this Act takes effect July 1, 2020.